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When you make a purchase with your credit card, the issuer is required by law to provide a grace period during which you can pay off purchases in full without being charged any interest. The Credit CARD Act of 2009 states that credit cards must give customers a grace period of at least 21 days; most issuers give about 25 days.

However, the grace period requirement does not apply in all situations. There is usually no grace period for the following circumstances:

  • Cash advances – these almost always begin accruing interest right away, and usually at a higher APR than the interest rate for purchases.
  • Balance transfers – like cash advances, interest can begin accruing immediately, and at a different rate than the purchase APR.
  • Checks – if your credit card issuer sends you checks that you can use to pay bills or get cash, these also do not usually have a grace period, and a different APR may apply.

Also, if you carry a balance from one month to the next, the grace period requirement is dropped and interest will be charged from the day you make a purchase. Even if you leave a small portion of your balance unpaid one month, the next month your purchases will accrue interest from the time you make the purchase.

To avoid paying interest, pay off your entire credit card bill in full every month before the due date.